If you own a property in Nigeria, there are many options are available to manage and protect your property. One concept is the landholding trust. What is a landholding trust and what should you know about this concept? This article provides all you need to know about the concept and how to establish it.
What is a Landholding Trust?
Landholding trust is a concept in real estate in which a legal understanding exists between a trustee and a beneficiary. A beneficiary hands over the property to the trustee with legal documentation. The trustee could be an individual or a real estate agency, and they manage the trust or property. A trustee could also be a lawyer or a financial establishment in the country.
The beneficiary benefits from the arrangement by receiving income from the property. In some deals, the beneficiary or beneficiaries also enjoy other benefits related to the property. For landholding trusts, the property could include lands and buildings.
Why Should I Use Landholding Trusts?
Landholding trust is not a new concept in the Nigerian real estate industry. However, it does come with ample benefits for all parties involved. If you're considering Landholding trust, here are some reasons for you to explore this option further."
Planning and Purpose
Landholding trusts help you create a plan for your property. This plan can include the uses of the property when you are not around or even after death. It also helps maintain the purpose or the goal of the property.
Protection of Your Assets
Assets that are in the hands of a trustee are safe from financial issues involving payment or debt. Hence personal creditors can not use the property as collateral for your debts.
Anonymity
A landholding trust is the choice for whoever wants to enjoy the benefits of a property with a degree of privacy. Landlords in Nigeria use this concept to remain the confidential owner or beneficiary of a property.
Management
A trustee can make managerial decisions when running the affairs of the property. A trustee can make certain decisions as long as it's not against the purpose and plan of the beneficiary. This change in management can help improve the investment.
How Do I Setup a Landholding Trust?
If you are a property owner, there are careful steps to take when setting up this trust. The right steps help you create the right and proper plan. Here are certain steps:
Have Clear Objectives
A clear objective is necessary when highlighting why you want to set up this trust. The goal could be to protect the assets, manage it, or plan for future endeavors. A clear objective gives you direction on how to establish the trust.
Choose Your Trustee
This step is significant because the competence of the trustee is important to your goal. Other than the level of competence, the trustee should be trustworthy.
You should consult professional entities like real estate agencies to help select a trustee.
Create Trust Agreement
A trust document is essential to the progress of your plan. You should create this agreement with the help of your legal representative. The trustee’s power and the beneficiary's rights and gains are important parts of the documents.
Having an expert guide while drafting the agreement will ensure compliance with the many legal requirements of the Nigerian real estate industry.
Fund and Establish the Trust
The next step requires changing the property title to reflect the new changes. Do your best to maintain the trust that you have built with the trustee. There should be compliance and transparency between the two parties. There should be clear records on the property management.
What Are Some Misconceptions About Landholding Trusts?
It is possible to have some misconceptions about the idea of a landholding trust. Here are some facts that help correct such errors:
Landholding Trust Is For All
There is no wealth threshold for landholding trusts. Irrespective of the level of wealth, you can establish a landholding trust for your property and enjoy the many benefits involved in the concept.
Landholding Trusts Can Be Changed
The deal or agreement binding a landholding trust is not set in stone. Circumstances often require changes to the benefits or management power. You can always modify these agreements depending on the circumstances.
Landholding Trusts Are Easy to Setup
The legal side of the agreement should not deter you from establishing a landholding trust. With the right personnel present, you can easily set up this concept without issues.
It is basically a simple process of finding a trustee and creating an agreement between the parties.
What is the Legal Structure for Landholding Trusts in Nigeria?
Understanding the laws that govern landholding trusts in Nigeria is a bit complex. This is the same for other sectors of the real estate industry. The law often varies depending on region and state. Hence it is hard to keep up with the laws. However, here are some general acts that serve as guidelines.
Land Use Act of 1978
This Nigerian law regulates land ownership and tenure in the country. It declares the government’s ownership of all lands. Individuals have access to these lands when they have obtained a right of occupancy. This law is crucial to landholding trusts.
Trusteeship in Nigeria
The trusteeship in Nigeria varies from region to region. This guideline explains the role of all stakeholders in the agreement plan.
Nigerian Property Law
Another legal detail is the Nigerian property law. This law outlines property ownership according to various regions of the country. It also highlights the customary laws that are important to various ethnic groups in the country.
Conclusion
Landholding Trust can be the answer to protecting and managing your properties. It takes the managerial burden from you while it keeps the dividends and benefits. You don’t have to worry about the common misconceptions surrounding this concept. With proper planning, it is a smooth process.
Planning is important when dealing with any legal concept in the Nigerian real estate industry. Hence having a trusted real estate agency like Land Republic can help to establish a positive agreement with all the perks and advantages.
